UVLT Rejects Norwich Creamery Plea

Chris Gray, of Norwich Farm Creamery talks with Susanne and George Abetti who stopped at his booth to sample the milk, yogurt and cheese he had on offer during Vital Communities' Flavors of the Valley event at Hartford High School in White River Junction, Vt., Sunday, April 8, 2018. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

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Norwich — The fate of Norwich Farm Creamery remains in limbo as the owners of the business dispute an end-of-April deadline to move out established by their current landlord, Vermont Technical College.

Vermont Tech in March sent the creamery a termination of lease notice in order to deliver the renovated Turnpike Road farmhouse and dairy facility “free of all tenants” to the Upper Valley Land Trust next month, as a purchase option between the trust and the college requires.

Meanwhile, the land trust on Friday informed the creamery owners, Chris Gray and Laura Brown, that UVLT was rejecting their proposal to continue their business on the property. The land trust cannot accept proposals that do not pay for themselves, because its nonprofit tax exemption depends on spending charitable dollars for charitable purposes, UVLT Executive Director Jeanie McIntyre said.

An attorney for the creamery, Tom Higgins, said on Friday that he believed Vermont Tech could not cut short its $500-a-month lease with Gray and Brown, which will end after five years in July 2021.

“I have yet to hear an explanation for why the lease is not a valid and enforceable lease,” Higgins said, noting that Vermont Tech and the creamery would have to reach an understanding before the end of the month.

“If there isn’t an agreement quickly, we have to ask the court to tell the parties what to do,” Higgins said.

Vermont Tech acquired the property in 2015, when Andy Sigler, former CEO of paper-maker Champion International, donated the farm buildings and more than 350 acres of land.

The land trust agreed to buy much of the outlying land for $300,000, entering into an “option to purchase” agreement with VTC in the same year.

Vermont Tech intended to use the property as a working farm where students would reside and learn the dairy trade, but, facing budget pressure and meager student interest in the Norwich location, discontinued the program this fall.

Norwich Farm Creamery arrived in 2016 under a business plan that called for the resident dairy farmer, Josh Swift, to sell milk to the creamery. Vermont Tech bought out Swift in spring 2017, and his herd of 80 cows left with him.

The option agreement says that the land trust may buy the farm if the college stops using it for agricultural and educational purposes. It also requires that the school deliver the property “free of all tenants, personal property, and encumbrances” — a provision that Vermont Tech is attempting to satisfy by terminating the creamery’s lease early.

Still, Higgins said, the Gray-Brown family is entitled to stay the course of its rental agreement, even though the school and the land trust signed their purchase option before the creamery lease began.

“Chris and Laura are not parties to that agreement,” he said. “Just because (Vermont Tech) had a contingency plan doesn’t change their obligation to Chris and Laura.”

“We clearly don’t agree with that interpretation,” she said in a phone interview on Friday.

Moulton said she couldn’t comment further on this legal matter, but said the school’s counsel was working with Higgins. She also mentioned that Vermont Tech and the land trust have discussed pushing back the closing date so that Gray and Brown have more time to make the transition.

Either way, the college is preparing to remove creamery equipment from the Turnpike Road property before the May 1 deadline, since federal grants require that it be used for educational purposes.

Whatever resolution Gray and Brown reach with Vermont Tech, their new landlords say they do not plan to keep the creamery as a business tenant.

“We have informed Chris Gray and Laura Brown today that, after spending a considerable amount of time reviewing their proposal, we cannot accept it,” McIntyre, the land trust executive director, said on Friday.

McIntyre said UVLT still was considering other proposals, but the trust wants business programs that are “economically sustainable.” If a business requires subsidy from the land trust, then the nonprofit trust may find itself paying charitable dollars toward non-charitable purposes — a no-no for federal tax purposes, she said.

The trust also is unwilling to meet Gray and Brown’s needs for rental rates, which currently are about $500 a month but could rise above $2,000 in the current market.

McIntyre explained the land trust’s position with a similar argument, saying charging market-rate rent was “a matter of making sure that charitable dollars are not subsidizing an individual’s occupancy.”

Gray directed a request for comment to his attorney on Friday afternoon, citing the legal questions under consideration.